Action, Transaction, and Exchange

Twitterward, Double-D asks “Can you recommend, SVP, a primer on “transaction” for such as I? And please pronounce it rhymes with trimmer. Thx.” & clarifies “not costs: the concept, definitions, et. al. ‘What is ‘transaction’?'” I assume SVP stands for s’il vous plaît, and not for senior vice president. I won’t stake my reputation on it though.

Let’s work backwards. As many of you know, I blog extensively at Euvoluntary Exchange. As such, I spend more than my fair share of time mulling the nature of exchange, including questions of consent and coercion. Most of what Munger, Horn, and I discuss at EE deals with exchange proper: the voluntary meeting of the minds that results in two parties transferring trade objects to their highest valued use. We’ve more or less settled (to my satisfaction, anyway) on something of a spectrum, with fully just euvoluntary exchange at one end and all-out coercion at the other end.

Reminder, the 6 conditions of EE are:
(1) conventional ownership
(2) conventional capacity to buy/sell
(3) absence of regret
(4) no uncompensated externalities
(5) neither party coerced by human agency
(6) neither party coerced by circumstance; the disparity in BATNAs is not “too large”

Sure, every now and again, we run across questions that don’t exactly fit into the bilateral exchange space (eg, Jeff asked me once if autocannibalism is euvoluntary. My answer is a hearty “it depends”), but I usually dodge questions like this by invoking the convenient fiction of the ersatz self: “you” can trade with “other you”, a mental fiction distant in time or space. This is usually good enough to get at the main moral intuitions, but it’s ontologically unsatisfying, at least to me.

Luckily, that’s not the question Double-D asked. Instead, I’d like to see how this question of the nature of transaction overlaps and maybe slops over the exchange spectrum.

So here’s what sort of makes sense to me. An “exchange” is de minimis voluntary: both parties to an exchange expect to be made better off, even if one or more EE condition is violated (except #5—coercion is not voluntary… unless it is, in which case, it may only look like coercion to third parties). So a robbery is not an exchange. But it is a transaction. A violent, unwanted transaction to be sure, but a transaction nonetheless. To me, the chief characteristic of a transaction is that it involves (at least) two people. Exchanges are therefore transactions, but not all transactions are exchanges. When your boss gives you a project, that’s a transaction, but not an exchange. When you withdraw deposits at the bank, that’s a transaction; when you agree to the terms of a loan at the same bank, that’s an exchange. Exchange (particularly euvoluntary exchange) is felicitous. Transactions needn’t be.

And then there’s action. Action subsumes the other two, but also includes “transactions” where one party is nature. Carting field stones all by your lonesome to build a fence for your sheep is action. Picking your nose is action. Writing blog posts no one will read is action.

I encourage you, O dearest reader, to consider justice to be an additional salient dimension here. There is nothing that inheres to any of these three a particular notion of justice. There are just, unjust, and injust actions, transactions, and exchanges (though, admittedly, Munger crafted the euvoluntary exchange construction specifically that it’d conform to basic justice norms). This matryoshka is intended in no way a shortcut around the very serious business of #phronesis.

One thought on “Action, Transaction, and Exchange

  1. David Duke

    SVP could mean “pretty please with sugar on top” in three characters or it could mean I want the response of a fellow who earns much but does little.

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